Share:
House Co-Sponsorship Memoranda
House of Representatives
Session of 2017 - 2018
Regular Session
MEMORANDUM
| Posted: | October 12, 2018 11:33 AM |
|---|---|
| From: | Representative Michael N. Corr |
| To: | All House members |
| Subject: | Beer Equity |
| In the near future, I plan to introduce legislation to update the framework by which malt and brewed beverage manufacturers can bring their products to the marketplace. This framework has not been updated in decades, yet the manufacturing industry and the wholesaler industry have changed dramatically during that time. Currently, malt and brewed beverage manufacturers enter into contracts with a wholesaler for distribution of their product. However, unlike any other industry that comes to mind, these contracts have been deemed, by the PLCB, as everlasting. If the relationship ceases to prove beneficial for the manufacturer, the only recourse is an extremely costly litigation and a burden to prove 'good cause.' Due to the financial resources needed for such court action, these contracts are de-facto evergreen. Our legislation will provide the opportunity for a manufacturer to pay a premium for the right to terminate the relationship if it so chooses. By providing this opportunity, the manufacturer can retain some control over the brand and the wholesaler is rewarded with an equitable payment for services provided. An added caveat to this provision is that any manufacturer representing more than 20 percent of the wholesaler portfolio would not be eligible for buying out, thus protecting wholesaler businesses that are heavily reliant on one brand. Further, our legislation would allow the manufacturer the right to purchase its brand before being sold to another wholesaler. The terms of such purchase will be determined by the marketplace. Currently, wholesalers can sell brands between themselves with no input or opportunity for refusal by the manufacturer. Our legislation would provide the manufacturer an avenue for protection in the event it does not want to be sold to another wholesaler. The goal of this legislation is to respect and update the three tier system and provide for the continued growth of this powerful economic engine in our Commonwealth. Pennsylvania is the largest producing state of craft beer, and we have the opportunity to be leaders in cultivating this ever growing industry. I hope you will join me in this effort by becoming a cosponsor. |